I need your help. My wife and I have worked hard building our business with hopes that our son would one day join the business and eventually own it when we are retired. We sent him to a business school abroad only for him to return with a photography degree. He is our only child but he is not interested in the business we have built and all our plans for him. If he insists on not joining the business, how can we keep the business alive after we are retired or even gone?
I empathise with you regarding the actions of your son. Many parents are increasingly surprised that their children would rather pursue alternative careers other than the ones they desired for them. In many cases however, such children have gone ahead to excel in their chosen careers. Although as parents, we hope that our children follow our directives, we sometimes have to lend our support if they choose to pursue their dreams instead, hoping for the best. While it is yet possible that your son eventually returns to the family business, the best approach to take at this juncture is one that favours both the business and your son.
To ensure that your business survives and continues to run into the foreseeable future, I would recommend that you create a Trust and transfer your shares or other ownership interests in your business to the Trust. The Trustee as owners of the business would run the business by appointing and overseeing the management of your business in the event that you and your wife are retired, become infirm or pass away. You may retain control of your business through the Trustee while you are alive. The income generated by the business would be held by the Trust on your behalf and for the benefit of anyone you may nominate as beneficiary.
You may name your son as a beneficiary and specify that the Trustee may provide for the welfare of your son (or grandchildren) in the Trust. In order to make your son more responsible, you may include “Spendthrift” provisions in the Trust. A Spendthrift provision may state, for example that unless your son is in formal employment, reaches a certain age or has an alternative and verifiable legal source of income, he would not take benefit of the funds or assets in the Trust. Should your son eventually choose to honour your wishes and return to the business, you may make provision for him to do so as well.
I believe this may be in the interest of your child as well as preserve the business. In the words of Warren Buffet, one should leave children with ”enough money so that they would feel they could do anything, but not so much that they could do nothing.” You may also designate alternative persons or entities such as charitable organisations to benefit from the Trust in the event that the assets do not pass on to your son or grandchildren.